Success Stories - Pensions

Secret2ndAccount

There are 21:9 monitors, but not TV's.  Best TV's have fantastic image processing, and are capable of extreme brightness where required. There isn't a 21:9 monitor that can stand up to the best TV.

Cus

Do you guys want a 'success stories - TV's' thread created? 😁

leosayer

leosayer said:

My wife and I are in our early 50s and by any reasonable measure I consider we are financially secure for the rest of our lives. In total between us we are due around £45k in DB pensions, 2 x full state pensions, have  £500k in DC/SIPPs and £100k in ISAs. The mortgage on our house was paid off 10 years ago and we are very happy living where we are.  The date we have in mind for retirement is April 2025 but right now, I think I want to stop sooner than that. 

How did we achieve this?
- Working since the age of 18 without break in relatively high paying jobs and final salary schemes. Living in London from childhood helped
- Being lucky with timing of property purchases (mid 90s and early 2000s)

- Spending a lot of time researching financial planning and investments and taking full advantage of tax reliefs, matched pensions and offset mortgages
- Investing from an early age and not being forced sellers even when things seemed very precarious eg. credit crunch

Both my wife and I had direct experience of the impact that limited financial resources and knowledge can have on a family and this drove me to a career in asset management and my wife to the public sector.  We're both pretty prudent when it comes to our finances but it still took some fairly major events for us take action. For example:

Before we bought a house together in 2001 I sold my flat and remember being shocked how little of my 25-year mortgage had been paid off after 6 years of ownership. From that point on I resolved to have a much better understanding of the maths and through investment and saving we had fully offset the mortgage in 2013.

In 2008, I had started investing more with a view to using those funds to pay off the mortgage. I was also paying into a share option scheme at work and had a fairly large amount of cash saving in an Icelandic bank. Then the credit crunch happened and the shares tanked by 40%+, my share options were wiped out (forever as it turned out), the cash savings weren't accessible for months and my job was looking very precarious. This was quite a scary time especially as we had a young child but we came through it although I didn't put any more money into investments for another 4 years whilst we focused on offsetting the mortgage.

In 2012, my firm stopped accruals into the DB scheme and shifted us to DC. I realised I didn't really have a clue of the impact so spend a lot of time trying to make sense of it all. I worked out that I'd need to put in around 35% of my salary to have a hope of matching what I'd lost.  I then started to learn about tax reliefs and when the Pension Freedoms Act came in in 2015 we really set about making sure we secured out retirement, making good use of salary sacrifice.

Since 2012, when we started adding to investments again, they have grown (if my calcs are to be believed) by 9% per year on average. We have had 5 years of 18%+ performance and our worst year was 2018 (down 10%). Throughout this time we were invested 100% in equity until last year when we realised that retiring soon was a real possibility. This, plus the increase in bond yields gave me the impetus to start directing our future savings to cash and short term bond funds. We are currently at 22/78 and I'm targeting 25/75. I feel we can take more risk because of the security provided by our DB schemes but I'm now consider whether a more risky approach is necessary now that long term bond yields are at 5% and we will only drawn on our DC savings for 12 years from age 55 to 66 until State Pensions kick in. 

Looking back, I have effectively had a second job of planning our family's financial future for the past 10 years and I really must thanks this forum for invaluable help along with the Pistonheads Finance forum and YouTubers Ben Felix, James Shack, Pete Matthews and Lars Kroijer.

I must also castigate successive government for the never ending spiral of complexity and change around the pension and taxation regime. Just looking at the acronyms that I have become exposed to....DC, DB, LTA, AA, UFPLS, FADD, MPAA, ISA, LISA, SS, SIPP, GMP, COPE, AVC, TFC, PCLS....Luckily I'm a bit geeky and work in FS so have a head start compared to most people. 

I thought I’d reply to my old post from two years ago and share an update for my wife and I.

We had planned to finish work in April 2025, but we both took the chance to step away in December 2024 thanks to some very timely voluntary redundancy programmes. The severance payments weren’t life-changing, but they gave us a useful boost – enough to top up pensions a bit more and cover our living costs for over six months.

In the past few weeks, we’ve started drawing from our DC/SIPPs for the first time, using personal allowance and basic rate tax bands. I’ll also be starting my DB pension in the next tax year.

Since my last post, our investments have done well – up about 25% on top of our extra contributions – so we’ve ended up ahead of where we expected to be. That’s given us more flexibility, and we’re now putting some of it into extensive home improvements to set us up comfortably for the next 20+ years. I still spend plenty of time  with cashflow spreadsheets and investment allocation modelling which can be a bit tricky when large amounts come and go at different times.

It does feel a bit nerve-wracking to be spending from savings rather than relying on a salary, but it hasn't stopped us spending! The plans we made have become reality and it's very satisfying.

A big thank you again to those who contribute on this forum – your posts have been a huge help along the way. I hope I can repay this with my ongoing contributions. 

LeafGreen

thankyou for the update and congratulations on your retirement!

Vitor

My pension story, now aged 61 I retired at 59 and 1/4. Started working in 1985 for small engineering company with DB pension, left in mid 1990s with pension preserved with normal retirement age 65. Company long since bought over.
Joined Thomas Cook, paying into their DB pension, took VR in 2002, leaving pension preserved.
Joined Civil Service, joining Classic scheme. Moved onto Alpha in 2015 so took out separate contract, paying monthly to buy additional contributions for Classic. At time, nobody expected McCloud Remedy for age discrimination.

Roll on to 2023, decided to retire at 59 and 1/4, elected to take McCloud Remedy for 2015 to 2022 so treated as being on Classic for that period. Took myCSP Pension with no tax free lump sum, payments are index linked.

Roll on 2025, had a health scare so decided to take Thomas Cook pension early, fortunately it was nearly 100% protected by Pension Protection Fund. Took 25% lump sum tax free, the payments are index linked. Reviewed engineering company pension, decided to take it early with 25% tax free lump sum and elected for Pension Increase Exchange to give more now, but reduce future index linking. This was with an eye on State Pension kicking in when age 67 as a "booster" - I have full NI contributions. 

All in all, I feel I've been fortunate ending up with 3 index-linked DB pensions in advance of State Pension. Also benefited from McCloud Remedy so most of my pensionable years deemed to be Classic (plus bought additional income), benefited from Thomas Cook fund going into PPF (I feared the money was gone with the company!) and benefited from two tax-free lump sums before any budget tinkering. My thinking was take the cash now when I can still enjoy it in slightly early retirement.

Isthisforreal99

Vitor said:

My pension story, now aged 61 I retired at 59 and 1/4. Started working in 1985 for small engineering company with DC pension, left in mid 1990s with pension preserved with normal retirement age 65. Company long since bought over.
Joined Thomas Cook, paying into their DC pension, took VR in 2002, leaving pension preserved.
Joined Civil Service, joining Classic DC scheme. Moved onto Alpha in 2015 so took out separate contract, paying monthly to buy additional contributions for Classic. At time, nobody expected McLeod Remedy for age discrimination.

Roll on to 2023, decided to retire at 59 and 1/4, elected to take McLeod Remedy for 2015 to 2022 so treated as being on Classic for that period. Took myCSP Pension with no tax free lump sum, payments are index linked.

Roll on 2025, had a health scare so decided to take Thomas Cook pension early, fortunately it was nearly 100% protected by Pension Protection Fund. Took 25% lump sum tax free, the payments are index linked. Reviewed engineering company pension, decided to take it early with 25% tax free lump sum and elected for Pension Increase Exchange to give more now, but reduce future index linking. This was with an eye on State Pension kicking in when age 67 as a "booster" - I have full NI contributions. 

All in all, I feel I've been fortunate ending up with 3 index-linked DC pensions in advance of State Pension. Also benefited from McLeod Remedy so most of my pensionable years deemed to be Classic (plus bought additional income), benefited from Thomas Cook fund going into PPF (I feared the money was gone with the company!) and benefited from two tax-free lump sums before any budget tinkering. My thinking was take the cash now when I can still enjoy it in slightly early retirement.

Think you are getting your DC and your DB's mixed up. Civil Service pension is a DB pension. You also say you took no lump sum with your Classic pension? What happened to the standard lump sum (3 x pension)? Did you do an inverse commutation?

QrizB

Also (if you're going to edit your post) it's McCloud, not McLeod.

https://www.civilservicepensionscheme.org.uk/your-pension/2015-remedy/

Vitor

Corrected errors in my post , yes I boosted lifetime income from myCSP by inverse commutation (sometimes called “pension conversion”.

Isthisforreal99

Vitor said:

Corrected errors in my post , yes I boosted lifetime income from myCSP by inverse commutation (sometimes called “pension conversion”.

Last time I looked at those factors they were shockingly bad, not something I would have done but each to their own.

atalantalass

leosayer said:

leosayer said:

My wife and I are in our early 50s and by any reasonable measure I consider we are financially secure for the rest of our lives. In total between us we are due around £45k in DB pensions, 2 x full state pensions, have  £500k in DC/SIPPs and £100k in ISAs. The mortgage on our house was paid off 10 years ago and we are very happy living where we are.  The date we have in mind for retirement is April 2025 but right now, I think I want to stop sooner than that. 

How did we achieve this?
- Working since the age of 18 without break in relatively high paying jobs and final salary schemes. Living in London from childhood helped
- Being lucky with timing of property purchases (mid 90s and early 2000s)

- Spending a lot of time researching financial planning and investments and taking full advantage of tax reliefs, matched pensions and offset mortgages
- Investing from an early age and not being forced sellers even when things seemed very precarious eg. credit crunch

Both my wife and I had direct experience of the impact that limited financial resources and knowledge can have on a family and this drove me to a career in asset management and my wife to the public sector.  We're both pretty prudent when it comes to our finances but it still took some fairly major events for us take action. For example:

Before we bought a house together in 2001 I sold my flat and remember being shocked how little of my 25-year mortgage had been paid off after 6 years of ownership. From that point on I resolved to have a much better understanding of the maths and through investment and saving we had fully offset the mortgage in 2013.

In 2008, I had started investing more with a view to using those funds to pay off the mortgage. I was also paying into a share option scheme at work and had a fairly large amount of cash saving in an Icelandic bank. Then the credit crunch happened and the shares tanked by 40%+, my share options were wiped out (forever as it turned out), the cash savings weren't accessible for months and my job was looking very precarious. This was quite a scary time especially as we had a young child but we came through it although I didn't put any more money into investments for another 4 years whilst we focused on offsetting the mortgage.

In 2012, my firm stopped accruals into the DB scheme and shifted us to DC. I realised I didn't really have a clue of the impact so spend a lot of time trying to make sense of it all. I worked out that I'd need to put in around 35% of my salary to have a hope of matching what I'd lost.  I then started to learn about tax reliefs and when the Pension Freedoms Act came in in 2015 we really set about making sure we secured out retirement, making good use of salary sacrifice.

Since 2012, when we started adding to investments again, they have grown (if my calcs are to be believed) by 9% per year on average. We have had 5 years of 18%+ performance and our worst year was 2018 (down 10%). Throughout this time we were invested 100% in equity until last year when we realised that retiring soon was a real possibility. This, plus the increase in bond yields gave me the impetus to start directing our future savings to cash and short term bond funds. We are currently at 22/78 and I'm targeting 25/75. I feel we can take more risk because of the security provided by our DB schemes but I'm now consider whether a more risky approach is necessary now that long term bond yields are at 5% and we will only drawn on our DC savings for 12 years from age 55 to 66 until State Pensions kick in. 

Looking back, I have effectively had a second job of planning our family's financial future for the past 10 years and I really must thanks this forum for invaluable help along with the Pistonheads Finance forum and YouTubers Ben Felix, James Shack, Pete Matthews and Lars Kroijer.

I must also castigate successive government for the never ending spiral of complexity and change around the pension and taxation regime. Just looking at the acronyms that I have become exposed to....DC, DB, LTA, AA, UFPLS, FADD, MPAA, ISA, LISA, SS, SIPP, GMP, COPE, AVC, TFC, PCLS....Luckily I'm a bit geeky and work in FS so have a head start compared to most people. 

I thought I’d reply to my old post from two years ago and share an update for my wife and I.

We had planned to finish work in April 2025, but we both took the chance to step away in December 2024 thanks to some very timely voluntary redundancy programmes. The severance payments weren’t life-changing, but they gave us a useful boost – enough to top up pensions a bit more and cover our living costs for over six months.

In the past few weeks, we’ve started drawing from our DC/SIPPs for the first time, using personal allowance and basic rate tax bands. I’ll also be starting my DB pension in the next tax year.

Since my last post, our investments have done well – up about 25% on top of our extra contributions – so we’ve ended up ahead of where we expected to be. That’s given us more flexibility, and we’re now putting some of it into extensive home improvements to set us up comfortably for the next 20+ years. I still spend plenty of time  with cashflow spreadsheets and investment allocation modelling which can be a bit tricky when large amounts come and go at different times.

It does feel a bit nerve-wracking to be spending from savings rather than relying on a salary, but it hasn't stopped us spending! The plans we made have become reality and it's very satisfying.

A big thank you again to those who contribute on this forum – your posts have been a huge help along the way. I hope I can repay this with my ongoing contributions. 

I dip in an out of this forum and have found it all so useful. I wanted to say firstly, massive congratulations on achieving your retirement  - you stuck to your plan, despite knocks on the way. No doubt some will call you lucky. You acknowledged the luck you had, but it's mostly it wasn't that, it was good planning. I wondered what advice you would have for me. I've always been anxious about money and have played it safe, too safe. However I am now mid-50s and after a career in the public sector, I want to retire next year. My pension contributions are mainly in the legacy scheme. I own a property in Edinburgh that I rent out that has a very small mortgage on a very good fixed deal that will run out next year. The property I live in has a larger mortgage also on a very good fixed deal that has 4 years to run. I'm overpaying that and will be able to continue the overpayments. At the end of the fixed deal I there will only be c£30k outstanding. I have £70k in a cash isa and £10k in another savings account. My monthly pension should mean my income will be the same as it was when I was working (assuming I pay the mortgage off on the first property). Would there be any reason why paying off the mortgage with some of my lump sum wouldn't be a good idea? Other than property I just have cash and I don't know where to start in terms of looking to invest for better returns / capital growth and for example to save up the sum needed to pay off the second mortgage. I've heard about tracker funds, investment platforms etc but...where to find out about these things and know where to put my money without having to engage an adviser? I'd like to have some sort of investment plan to pay off that £40k in 4 years time. Any advice on approaches you took, or lessons from your experiences would be really welcome.